O’Leary says regulators favour IAG bid for Aer Lingus

European and UK regulators are likely to favor the purchase of Aer Lingus by British Airways owner IAG if an offer is made, Ryanair’s chief executive officer Michael O’Leary said.

“I suspect the regulatory authorities will fall over themselves to encourage an IAG takeover,” Mr O’Leary said on Wednesday.

While the IAG bid “isn’t the last option for Aer Lingus,” it “clearly demonstrates that Aer Lingus has no viable independent future, the only question is, which partner?”

International Airlines Group is mulling a higher indicative offer for Aer Lingus after seeing two earlier proposals dismissed, according to sources .

The most recent, at €2.40 for each share, which valued the Irish airline at €1.28 billion ($1.48 billion), is 40 cents lower than the amount offered by Ryanair in 2006 in the first of three unsuccessful takeover attempts by the budget carrier.

“Our stake has been for sale for about an 18-month period,” Mr O’Leary said. “We’ve gone to most of the leading airlines in Europe, including IAG, all of whom turned us down,” he said, adding that he has not discussed the most recent proposal with either IAG or Aer Lingus.

Mr O’leary declined to comment on what price he considers reasonable for Ryanair’s 30 per cent shareholding. The Irish Government, which controls 25 per cent, would also need to sign off on a deal.

“The Government’s role in this is as a large shareholder, the same as Ryanair, their decision-making will be confined to ‘do you want the price IAG is offering?” Mr O’Leary said.

Buying Aer Lingus would help swell IAG’s bank of scarce take-off and landing positions at London Heathrow, Europe’s busiest hub, where British Airways is the number one carrier.

The deal would also mark the return of IAG CEO Willie Walsh, who began his career as an Aer Lingus pilot, eventually rising to run the company before taking over at BA.

- Bloomberg